Tuesday, October 11, 2011

Carpe Diem Links the Economic Miracle Called North Dakota

Link here.
Oil production in N. Dakota set more monthly records in August:
1. A new record for monthly production: 13,768,395 barrels, a 34.6% increase from last August.  In just a little more than two years (since June 2009), oil production has doubled in North Dakota (see chart above). 
2. A new record for average daily production: 444,142 barrels.  
3. A new record number of wells producing: 5,702. 
4. A new record for oil-related jobs: 16,200 (see chart), which is more than double the number of North Dakota oil jobs at the beginning of last year. 
At North Dakota's blazing current pace of monthly increases in oil production, the state will be producing more than 560,000 barrels of oil per day by January 2012 and will then pass #3 California (540,000 barrels per day) and #2 Alaska (550,000 barrels per day) to become America's second-largest oil producer.  North Dakota Department of Mineral Resources Director Lynn Helms is even more optimistic and predicts that the Peace Garden State could actually be producing as much as 800,000 barrels per day by the end of this year! 
I've been told that Lynn Helms was misquoted or he misspoke. The 800,000 bopd is predicted for end of 2015. Interestingly enough I have not seen a correction in the Dickinson Press yet if that 800,000 figure is in error. It will be interesting to see what the new year brings.

Earnings Season Begins

Earnings central is posted.

Chevron pre-announces:

All told, the company expects that its third-quarter results will be in line with those of the second quarter. Chevron reported a profit of $7.7 billion, or $3.85 a share, for the second quarter -- the largest quarterly profit since the third quarter of 2008.
Analysts' consensus forecast for the third quarter calls for earnings of $3.37 a share, according to FactSet.

The Story Behind Steve Jobs' Black Turtlenecks -- Absolutely Nothing To Do With The Bakken

I seldom post "inside stories" but this is a special occasion.

This is for another Steve, new to the area, who told us the background to Steve Jobs' black turtlenecks.  Steve was right on. Here it is from MacRumors:
"Sony, with its appreciation for style, had gotten the famous designer Issey Miyake to create its uniform. It was a jacket made of rip-stop nylon with sleeves that could unzip to make it a vest. So Jobs called Issey Miyake and asked him to design a vest for Apple, Jobs recalled, "I came back with some samples and told everyone it would great if we would all wear these vests. Oh man, did I get booed off the stage. Everybody hated the idea."
Despite being shot down by Apple employees, Jobs adopted the idea of a uniform for himself for the sake of convenience and identity, and drew on his friendship with Miyake to create his signature look.
"So I asked Issey to make me some of his black turtlenecks that I liked, and he made me like a hundred of them." Jobs noticed my surprise when he told this story, so he showed them stacked up in the closet. "That's what I wear," he said. "I have enough to last for the rest of my life."
For newbies: yes, this site is about the Bakken, but occasionally I post notes about Apple computers, my favorite computer. I own no shares in the Apple company.

EPA To Scuttle President's Initiative to Expedite Permitting on Federal Lands in North Dakota -- Just Say No

Link here.
Hearing scheduled: EPA will hold a hearing on this issue Oct. 13-14 at the State Health Building, 2639 East Main Avenue, Bismarck. The hearing run 1-5 p.m. and 7-9 p.m. on Oct. 13 and 8 a.m.-12 p.m. and 1-5 p.m. on Oct. 14. The public is encouraged to attend.
North Dakota, along with the industries that work to provide energy to the state, are committed to clean air and high visibility. As a result, North Dakotans enjoy some of the clearest visibility conditions in the United States. Despite that, a federal agency has said that it wants to set aside the state’s regional haze program in order to implement a federal program. But when it comes to a federal takeover of North Dakota’s visibility decisions, the benefits are hazy and the huge costs are crystal clear.
I guess this is EPA's response the President's initiative to expedite permitting on federal lands in North Dakota. What the right hand giveth, the left hand taketh away.

If you get to the public hearing, do me a favor, ask how the EPA feels about whooping crane killers.

Six (6) New Permits -- Bakken, North Dakota, USA

Daily activity report, October 11, 2011 --

Operators: CLR (2), Petro Harvester, Ward-Williston, BEXP, Flatirons Resources

Fields: St Demetrius, Columbus, Poe, Mouse River Park, and South Pleasant.

CLR has a wildcat in McKenzie County.

Only one of four wells coming off the confidential list reported an IP, a CLR well, with an IP of 477.

Otherwise a fairly benign report.

I Think Hell Just Froze Over -- Bakken, North Dakota,USA


Now that I've gotten the shock out of my system, a comment. Let's say you are one of the 20 percent unemployed or underemployed, or that you are a New Yorker, or a Californian, and you know that the President is to release a list of fourteen (14) critical initiatives to get folks back to work and home prices moving upward again, and get Wall Street fixed, and then you hear that one of the fourteen initiatives on the list is "expedite permits on North Dakota grasslands."

Say what? Does that even get a NoDak excited? When you get right down to it, with all the problems facing the US, and all the ideas floating about how to change things, I am absolutely impressed that North Dakota grasslands almost made it to the top ten, and in the final analysis made it to the final list.

I honestly did not think North Dakota was all that important to Washington, DC. I am impressed with whomever got this issue to the Oval Office.

I haven't seen the list of 14 initiatives, but something tells me the Gulf permitorium has not been listed. But the North Dakota grasslands permitorium has. Pretty impressive. I didn't know "we" were that important.

Original Post

(I think that phrase is okay, as long as it is not swearing.)

Link here.
About 80 applications for oil and gas projects in North Dakota's national grasslands will be put on the fast-track through the federal review process.

President Barack Obama announced late Monday that infrastructure projects in the Dakota Prairie and Little Missouri National Grasslands have been designated among 14 high priority projects nationwide. The projects will be expedited through permitting and environmental review processes so construction can begin as soon as possible.

This Post Is Specifically To Close The Loop On a Recent Discussion With Old Friends and New Friends at the El Rancho Today -- Bakken, North Dakota, USA

Somehow the conversation got around to "how many wells in a section?"

Of course that depends on how many formations one is talking about and how "good" the location is.

There is also the question of how effective fracturing is the farther one gets away from the borehole. I suggested that the general consensus is that fracturing is effective out to 500 feet laterally (500 foot radius, or 1,000 feet diametrically) suggesting 4 to 5 wells average across a 5,280-foot section line. Note: "general consensus" in previous sentence.

I suggested that it is very likely that fracturing is not necessarily effective that far out. I am way beyond my depth here, so it was just idle chatter. And then this: Coincidentally I see that "luckyone" elsewhere has opined the very same thing -- back on September 22, 2011. I don't recall reading that entry before (although I probably have) but the point is that there are at least a couple of us armchair observers suggesting that it may be as little as 300 feet laterally or radially. That is a game changer. I also think (and have previously posted) that the farther away from the well, the less effective the fracturing. And, of course, that is borne out by the number of reports in which not all stages were successfully fracked, and usually it is farther out than closer in.

When you get to the link, scroll down to September 22, 2011.

So, that closes the loop on this particular issue for the day.

Steve, it was good to meet you today; good luck in your endeavors.

Mike Filloon's Series on the Three Great Fields in the Bakken -- North Dakota, USA

Mike has posted Part III of his series on the three best oil fields in the Bakken.

Yesterday was the link to Part I, three great fields in the Bakken (Alger, Sanish, and the Parshall).

Today is Part II. When you go to that link, the first thing I would point out is the cumulative number of bbls -- look at those numbers. Mike is only including wells that came into production in June, 2010, or later, and look at the number of wells over 100,000 bbls. It took legacy wells (Madison, etc) up to 20 years to have returns like this. And, there are "no" dry wells in the Bakken. I sound like a broken record. Sorry.

The second thing: look for the "TFH" wells, the wells that targeted the Three Forks formation. Those are great wells, also. So, imagine four wells/section targeting the middle Bakken and four wells/section targeting the Three Forks.

I don't want to get too crazy here, but remember, there may be more than one "bench" in the Three Forks formation, also, at least in some parts of the state. Whiting, I believe, has talked about the additional "benches." (It's possible it was CLR; I sometimes forget, but it was either Whiting or CLR.)

I hope Mike doesn't mind, but his concluding paragraph is what keeps me excited about the Bakken:
24-hour IP rates are not a true indicator of production at 10 to 12 months. But, Brigham does consistently outperform during this time frame. Over 3 to 5 months Brigham is significantly better than Whiting. I am unsure if these specific wells will continue this after a year of production or if average production will be consistent for both companies. All said, both Whiting and Brigham are doing very well in these two fields. One point I would like to make is the very large increase in production by both companies over just a year or two. It is very possible some of these wells could have recoveries of over 1000 MBOe.
I do believe that at least one driller (I believe it was BEXP, which would make sense) said that higher IPs do mean faster payback and greater EURs and there seems to be general consensus that is true. I think the point that Mike is making that IPs between 2,500 (BEXP) and 1,500 (Whiting) don't result in a huge difference at 10 to 12 months, but there's no question in my mind that an IP of 2,500 (BEXP) is a significantly different well at 10 -12 months than one that has an IP of 500 ("company x").

With regard to "some of these wells could have recoveries of over 1000 MBOe" here's an update on some monster wells (as of August 31, 2011):
  • 17092, Behr 11-34H, Whiting, 3,027, Sanish, 743K bbls.
  • 17222, Austin 18-21H, EOG, 1,769, Parshall, 696K bbls.
  • 17227, Austin 21-28H, EOG, 3, 292, Parshall, 747K bbls.
  • 16954, Austin 6-15H, EOG, 3,633, Parshall, 641K bbls.
  • 17263, Chandler James 25-36H, Murex, 3,124, Sanish, 767K bbls. Not that it matters, but this well is still listed as "F" -- flowing, no pump.
  • 16059, USA 2D-3-1H, Petro-Hunt, see Charlson Field update for this, the most successful well to date in the current boom, 1,181K bbls (over the one million mark). Not that it matters, but this well is still listed as "F" -- flowing, no pump. Be sure to read the comment at this post.
It truly is going to be interesting to look at the cumulative numbers at 10 years of production. Folks, we are not even out five years yet. Again, Mike only looked at wells that were put into production as of June, 2010, or later -- that's only fifteen months or so ago.

Anyway, another nice article.

Iowa Public Television Will Be Airing Three Stories About the Region -- Bakken, North Dakota, USA

I posted a short note last week, noting that Iowa Public television was in town.

I received a nice comment from the IPT folks who expanded on their plans. They will be airing three shows based on stories from this area:
We were shooting a story for the PBS program Market To Market. We will be airing three stories from ND: the oil; the economy; and, the flood recovery in Minot. Keep checking our website of iptv.org/mtom for the story.
So, if anybody catches these and I forget to post reminders, let me know.

Random Photos of Activity in the Bakken -- Petroleum Services and Tools, Inc -- Williston, North Dakota

I doubt if most life-long residents of Williston not engaged in the oil industry have explored the backlots of the industrial park to the west of Million Dollar Way. Growing up in Williston I enjoyed exploring all areas of the town on my bicycle. One of the areas I particularly enjoyed was the maze of buildings in the various industrial parks.

Things have really changed. More buildings, way more trucks, and some very, very nice, new buildings in many cases. This is a particularly nice building in this particular area:

The entrance sits midway between the garages; the middle picture is the north end where FedEx is tucked in. Note, also, the nice Palmer Bit Company building. Apparently there are something like 350 businesses in Williston supporting the oil industry. These are just three of those companies. The bottom picture is from the south.

By the way, FedEx has a huge distribution center farther north of town, on the west side of the far end of Million Dollar Way.

FedEx Temporarily Moves Pick-Up Time Earlier -- Probably Due to Airport Renovation -- Bakken, North Dakota, USA

Normal pick-up time is 4:00 p.m. FedEx has temporarily moved their pickup time to 12:00 noon. I assume this is in order to drive the mail to Minot while the Williston airport is shut down for the week for resurfacing.

Best Story of the Day -- Yes, It Could Happen -- Cowboy Humor At Its Best -- Bakken, North Dakota, USA

For folks unfamiliar with the west, or more specifically western North Dakota, one of the things I like best is the lone cowboy's wry (or is it "dry") sense of humor, and an ability to see hypocrisy and triviality at a 1000 yards (to mix metaphors).

Whiting is seeking a permit to build a pipeline in southeastern North Dakota. At least one member on the regulatory commission -- no doubt a well-read lawyer -- asked if construction of the pipeline would hurt migratory birds, specifically whooping cranes.

On behalf of Whiting, no doubt a cowboy in another life, the spokesman replied:
Regan said there should be no adverse effect on migratory birds, including whooping cranes. If whooping cranes are spotted flying within a mile of the construction site, construction would cease.

“In my opinion, it is pretty unlikely that a whooping crane is going to stop by a construction site,” Regan said.

“It could happen.”
Yes, I suppose it could happen. If a whooping crane lands at a pipeline construction site, it's probably there to walk around a wind farm.

Pigs In Space -- Almost. But, It's Kows Over Kazakhstan -- North Dakota, USA

I first blogged about this back in February, 2011. With pictures.

I guess the flights are starting up again.
Hundreds of North Dakota cows bred to withstand brutal cold are being shipped in jumbo jets from Fargo to Kazakhstan to help build the nation's beef industry.
Data points:
  • 2nd year of a 10-year agreement
  • Flown on Korean Air Lines (which begs the question; "Can't Americans fly their own airlines?" Answer: liabilty insurance too high)
  • North Dakota cattle bred to withstand harsh Kazakhstan winters
  • 2,600 pregnant cows and heifers shiopped last year; about the same are slated this year
  • Weekly flights; 200 cows/flight
  • Frequent flyer miles? Nope, a single one-way flight.